Microsoft Corp. v. Nop

• Court: U.S. District Court — Eastern District of California
• Writing for the Court: Morrison C. England, Jr.
• Citation: Microsoft Corp. v. Nop, 549 F.Supp.2d 1233 (E.D. Cal. 2008)
• Decision Date: 17 April 2008
• Docket Number: No. CIV S-07-1276 MCE DAD.,CIV S-07-1276 MCE DAD.
• Parties: MICROSOFT CORPORATION, Plaintiff, v. Rith NOP, an individual, d/b/a Compu-Medic Systems, Defendant.

549 F.Supp.2d 1233

MICROSOFT CORPORATION, Plaintiff, v. Rith NOP, an individual, d/b/a Compu-Medic Systems, Defendant.

No. CIV S-07-1276 MCE DAD.

United States District Court, E.D. California.

April 17, 2008.

Jennifer N. Chiarelli, Perkins Coie LLP, Seattle, WA, Katherine M. Dugdale, Perkins Coie LLP, Santa Monica, CA, for Plaintiff.

ORDER

MORRISON C. ENGLAND, JR., District Judge.

The matter was referred to a United States Magistrate Judge pursuant to 28 U.S.C. § 636, et seq., and Local Rule 72-302(c)(19).

On March 11, 2008, the magistrate judge filed findings and recommendations herein which were served on all parties and which contained notice to the parties that any objections to the findings and recommendations were to be filed within twenty days. No objections to the findings and recommendations have been filed.

The court has reviewed the file and finds the findings and recommendations to be supported by the record and by the magistrate judge's analysis.

Accordingly, IT IS HEREBY ORDERED that:

1. The findings and recommendations filed March 11, 2008, are adopted in full;

2. Plaintiffs January 31, 2008 motion for default judgment is granted; and

3. Plaintiffs proposed order awarding default judgment and proposed permanent injunction are filed concurrently with this order.

ORDER AND FINDINGS AND RECOMMENDATIONS

DALE A. DROZD, United States Magistrate Judge.

This matter came before the court on March 7, 2008, for hearing on plaintiffs motion for default judgment against defendant. Jennifer N. Chiarelli appeared telephonically on behalf of plaintiff. There was no appearance by defendant. Having considered all written materials submitted in connection with the motion, and after hearing oral argument, for the reasons stated on the record and set forth below, the court recommends that plaintiffs motion be granted.

BACKGROUND

Plaintiff develops, markets, distributes, and licenses computer software. Plaintiff initiated this action for damages and injunctive relief against defendant for distributing infringing software. The complaint alleges claims for copyright infringement; trademark infringement; false designation of origin, false description, and false representation; common law unfair competition; imposition of a constructive trust; and an accounting. The complaint seeks damages, a permanent injunction, attorney's fees and costs.

Although defendant was personally served with process, he failed to appear in this action. The Clerk of the Court entered defendant's default pursuant to Federal Rule of Civil Procedure 55(a) upon plaintiffs request. Plaintiff then filed the instant motion along with supporting declarations and exhibits. Despite being served with all papers filed in connection with plaintiffs motion for entry of default judgment, defendant filed no written response to the motion and made no appearance at the hearing of the motion.

LEGAL STANDARDS

Federal Rule of Civil Procedure 55(b)(2) governs applications to the court for entry of default judgment. Upon entry of default, the complaint's factual allegations regarding liability are taken as true, while allegations regarding the amount of damages must be proven. Dundee Cement Co. v. Howard Pipe & Concrete Prods., 722 F.2d 1319, 1323 (7th Cir.1983) (citing Pope v. United States, 323 U.S. 1, 65 S.Ct. 16, 89 L.Ed. 3 (1944), and Geddes v. United Fin. Group, 559 F.2d 557 (9th Cir.1977)); see also TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987). Where damages are liquidated (i.e., capable of ascertainment from definite figures contained in the documentary evidence or in detailed affidavits), judgment by default may be entered without a damages hearing. Dundee, 722 F.2d at 1323. Unliquidated and punitive damages, however, require "proving up" at an evidentiary hearing or through other means. Dundee, 722 F.2d at 1323-24; see also James v. Frame, 6 F.3d 307, 310-11 (5th Cir. 1993).

Granting or denying default judgment is within the court's sound discretion. Draper v. Coombs, 792 F.2d 915, 924-25 (9th Cir.1986). The court is free to consider a variety of factors in exercising its discretion. Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir.1986). Among the factors that may be considered are

(1) the possibility of prejudice to the plaintiff, (2) the merits of plaintiffs substantive claim, (3) the sufficiency of the complaint, (4) the sum of money at stake in the action; (5) the possibility of a dispute concerning material facts; (6) whether the default was due to excusable neglect, and (7) the strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits.

Eitel, 782 F.2d at 1471-72 (citing 6 Moore's Federal Practice ¶ 55-05[2], at 55-24 to 55-26).

ANALYSIS

The detailed allegations of plaintiffs complaint and the attached exhibits show that plaintiff holds valid copyrights for the following nine computer software programs, including the screen displays and associated proprietary materials, such as user's guides, manuals, end-user license agreements, and certificates of authenticity, that are packaged with the programs: (1) Microsoft Windows XP Professional, (2) Microsoft Office 2003 Professional, (3) Excel 2003, (4) Outlook 2003, (5) PowerPoint 2003, (6) Word 2003, (7) Publisher 2003, (8) Business Contact Manager for Outlook 2003, and (9) Access 2003. The complaint also indicates that these software programs bear at least seven trademarks that Microsoft has registered with the United States Patent and Trademark Office.

The summons and complaint were served on defendant on June 29, 2007, by personal service. Defendant failed to answer or otherwise appear in the action. Plaintiff requested entry of default and served the request on defendant on August 24, 2007. The Clerk entered defendant's default on August 27, 2007. Plaintiff filed and served its motion for default judgment on January 31, 2008.

Although plaintiffs complaint alleges willful infringement of copyrights and trademarks, plaintiff seeks only the maximum amount of statutory damages permitted for non-willful copyright infringement ($30,000 for each of nine copyrights at issue, for a total of $270,000) and the maximum amount of statutory damages permitted for non-willful trademark infringement ($100,000 for seven of eight trademarks at issue, for a total of $700,000).¹ In addition to the requested award of $970,000 in statutory damages, plaintiff seeks to enjoin defendant from future infringement. Plaintiff also requests an award of attorney fees and costs in the amount of $7,233.75.

After weighing the Eitel factors, the undersigned finds that the material allegations of the complaint are sufficient to support all of plaintiffs claims and that the amount of money at stake is relatively small because plaintiff seeks only statutory damages for non-willful infringement. Plaintiff will be prejudiced if default judgment is denied because plaintiff will be without other recourse for recovery. In light of the entry of default against defendant, there is no apparent possibility of a dispute concerning the material facts underlying the action. There is no indication that defendant's default resulted from excusable neglect, in light of the fact that plaintiff communicated with defendant by mail and telephone in 2003 requesting that he cease and desist infringing activity, and that defendant was served with plaintiffs complaint, plaintiffs request for entry of default, and plaintiffs motion for default judgment. Defendant had ample notice of plaintiffs intent to pursue judgment against him. Although public policy generally favors the resolution of a case on its merits, defendant's failure to appear and defend against plaintiffs claims has made a decision on the merits impossible in this case. Because all of these factors weigh in plaintiffs favor, the undersigned, while recognizing the public policy that favors decisions on the merits, will recommend that default judgment be granted against defendant on all of plaintiffs causes of action.

After determining that entry of default judgment is warranted, the court must next determine the terms of the judgment. The Copyright Act provides that "an infringer of copyright is liable for either — (1) the copyright owner's actual damages and any additional profits of the infringer ... or (2) statutory damages, as provided by subsection (c)." 17 U.S.C. § 504(a). Subsection (c), in turn, provides that

the copyright owner may elect, at any time before final judgment is rendered, to recover, instead of actual damages and profits, an award of statutory damages for all infringements involved in the action, with respect to any one work, for which any one infringer is liable individually ... in a sum of not less than $750 or more than $30,000 as the court considers just.

17 U.S.C. § 504(c). In determining an amount that is just, courts consider such factors as

(1) "the expenses saved and the profits reaped;" (2) "the revenues lost by the plaintiff;" (3) "the value of the copyright;" (4) "the deterrent effect on others besides the defendant;" (5) "whether the defendant's conduct was innocent or willful;" (6) "whether a defendant has cooperated in providing particular records from which to assess the value of the infringing material produced;" and (7) "the potential for discouraging the defendant."

Tiffany (NJ) Inc. v. Luban, 282 F.Supp.2d 123, 125 (S.D.N.Y.2003) (quoting Fitzgerald Pub. Co., Inc. v. Baylor Pub. Co., 807 F.2d 1110, 1117 (2d Cir.1986)). See also Microsoft Corp. v. PC Express, 183 F.Supp.2d 448, 454 (D.P.R.2001) (listing same factors).

Similarly, the Lanham Act provides for statutory damages for trademark infringement, but in an amount "not less than $500 or more than $100,000 per counterfeit mark per type of goods or services sold, offered for sale, or distributed, as the court considers just." 15 U.S.C. § 1117(c)(1). "[T]he plain language of the statute affords plaintiffs the...